Supply Chain Issues Go Deeper Than Cobalt Sourcing

If you’ve read an article about the issues of mining supply chains recently, it probably had ‘cobalt’ in the headline.

And that’s because conflict cobalt is a very real, and very dangerous, problem. We’ve talked about it here before. However, cobalt – and other conflict minerals, like 3TGs – aren’t the only issues of mining supply chains. They are, in fact, the consequence of a large, more prevalent problem.

That problem is poorly tracked supply chains.

The Most Visible Problem: Sourcing

If you’re a consumer, you might be thinking: why aren’t companies doing more? Why do we still have problems with traceability in mining?

Tracking supply chains isn’t as simple as it seems. Companies – big or small – face a great deal of public attention when it comes to their sourcing.

Customers want to know where things are being sourced from, the ethics of the workforce, the impact on local communities and the effect on the environment. Companies have similar concerns, but theirs also extend to: is the product of good quality? Is product being lost? Are we obtaining the best value for money?

These concerns are largely products of supply chain opacity.

The sourcing of conflict cobalt and 3TGs are major problems in supply chains because of a lack of transparency. A very simplified version of the mining supply chain looks like this:

Often, however, there are multiple people in between. There might be a trader or trading house who acts as an intermediary between the miner and smelter. Because of the added complexity, many end companies (such as phone, laptop or car manufacturers) might not know where their product came from.

A company knows the process that their product goes through, but most would struggle to name every point. Often, this confusion occurs at the ‘miner’ step. Many companies source from traders, and they cannot verify where, exactly, the product comes from, and whether it was mined in an industrial or artisanal mine. This causes problems with confirming the ethics, sustainability and quality of the product.

How can we solve the opacity problem?

The opacity problem goes further than just conflict minerals.

It spreads to quality, quantity and traceability.

Product may get lost along the way. If the end mineral doesn’t match up to calculations, there’s little ways to pinpoint where the product became incorrect. This is a problem that supply chain transparency would solve.

Additionally – especially with cobalt – companies might source reputable cobalt. However, at some point in the supply chain, it becomes mixed with conflict cobalt. This affects both the ethics of the cobalt and poses the problem of uncertain quality.

We can solve this by having a supply chain strategy that incorporates better tracking, planning and sourcing.

A lot of companies still use outdated supply chain management systems. These might be in the form of traditional databases or paper-based ones. This poses a problem because of:

More potential for lost documents

Inefficient organisation

The necessity of intermediaries who are costly and require trust

So, what’s the better option?

If you read our piece on the digital supply chain, you know that digitalization can solve a lot of these supply chain issues.

Digitalization is the key to better, more secure supply chains. This means Industry 4.0 technologies, like automation, artificial intelligence, machine learning and blockchain.

Blockchain is a large part of this.

Blockchain, instead, offers:

No necessity for intermediaries

Permanence, decentralisation, resistance to change and deletion

Visibility

Cost-efficiency, especially in the long term

Machine learning and artificial intelligence also make mining processes more efficient. AIs are just as efficient as humans at predicting supply chain management movements and optimising strategies. AI can analyse data and predict future events, securing the supply chain process. It is also particularly useful in ore fragmentation, predictive analysis, and choosing the best location to mine.

Some companies are already using technologies that employ machine learning to predict ETAs for transport along the supply chain and to detect any problems.

Cost efficient, quick and easy

Implementing these technologies is not as complicated, or expensive, as you might think.

The technology will, instead, optimise costs and save time. At Blockhead Technologies, we have developed our platform STAMP, which uses blockchain technology to track supply chains pit-to-port. STAMP is designed to save you time and money that could be better spent elsewhere.